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Will 777-9-Led Abnormal Costs Hurt Boeing (BA) in Q2 Earnings?
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Increased 737 delivery figures are expected to have boosted The Boeing Company’s (BA - Free Report) commercial business in the second quarter. However, second-quarter 2022 results, scheduled for release on Jul 27, are projected to reflect the impacts of abnormal costs related to the 777-9 program, on the bottom-line front.
Click here to know how the company’s overall Q2 performance is expected to have been.
Solid 737 Max Deliveries to Boost Growth
Thanks to steadily recovering air traffic, improved delivery figures for Boeing’s 737 jets, a trend we have been witnessing in the past couple of quarters, were observed in the second quarter of 2022 as well. Notably, the aerospace giant delivered 103 737 jets in the soon-to-be-reported quarter, reflecting quite a solid improvement of 106% from 50 units delivered in the year-ago quarter.
In fact, such significant delivery figures of 737 primarily drove a significant surge of 53.2% in the company’s overall commercial deliveries. This, in turn, must have contributed to Boeing Commercial Airplane (BCA) business segment revenues in the soon-to-be-reported quarter.
However, the aerospace giant was unable to deliver any of its 787 Dreamliner jets in the second quarter of 2022, owing to production quality issues related to the program. This might have partially impacted the top-line performance of the BCA segment.
Currently, the Zacks Consensus Estimate for Boeing’s commercial business segment’s revenues, pegged at $6,491 million, indicates a solid 7.9% improvement from the year-ago quarter’s reported figure.
Earnings Expectation
On the cost front, delivery delays concerning the 787 performance issue are likely to have had an impact on BCA’s operating profit, thereby hurting its quarterly earnings. Also, the production pause for the 777-9 program is projected to result in approximately $1.5 billion of abnormal costs beginning in the second quarter, which in turn must have weighed on this unit’s bottom line.
However, improvements in commercial airplanes' financial performance due to increasing 737 MAX deliveries and consistent efforts by the BCA team to manage costs through business transformation activities must have contributed to this unit’s bottom-line growth in the first quarter.
Further, we expect to witness a steady improvement in the company’s expenses in relation to the storage of the 737 aircraft as jets stored so long in the inventory are gradually getting delivered.
So, the effect of the aforementioned factors on the overall second-quarter earnings performance of the BCA segment seems to have been mixed.
Currently, the Zacks Consensus Estimate for Boeing’s commercial business segment’s bottom line, pegged at a loss of $158 million, indicates an improvement from the year-ago quarter’s reported figure of a loss of $472 million.
What the Zacks Model Unveils
Our proven model does not conclusively predict an earnings beat for Boeing this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. This is not the case here.
Boeing has an Earnings ESP of -62.40% and a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Stocks to Consider
Here are three defense companies you may want to consider as these have the right combination of elements to post an earnings beat this season:
LHX delivered a four-quarter average earnings surprise of 2.32%. The Zacks Consensus Estimate for L3Harris’ second-quarter earnings, pegged at $3.16, has moved up 0.3% over the past seven days.
Spire Global, Inc. (SPIR - Free Report) has an Earnings ESP of +9.43% and a Zacks Rank #3.
Spire delivered an earnings surprise of 7.7% in the last reported quarter. The Zacks Consensus Estimate for Spire’s second-quarter sales is pegged at $18.93 billion.
CAE Inc (CAE - Free Report) : The company is expected to release its fiscal first-quarter results soon. It holds a Zacks Rank #3 and has an Earnings ESP of +2.27%.
The Zacks Consensus Estimate for CAE’s fiscal first-quarter earnings, pegged at 18 cents, has remained unchanged over the past seven days. CAE delivered a four-quarter average earnings surprise of 7.67%.
Image: Bigstock
Will 777-9-Led Abnormal Costs Hurt Boeing (BA) in Q2 Earnings?
Increased 737 delivery figures are expected to have boosted The Boeing Company’s (BA - Free Report) commercial business in the second quarter. However, second-quarter 2022 results, scheduled for release on Jul 27, are projected to reflect the impacts of abnormal costs related to the 777-9 program, on the bottom-line front.
Click here to know how the company’s overall Q2 performance is expected to have been.
Solid 737 Max Deliveries to Boost Growth
Thanks to steadily recovering air traffic, improved delivery figures for Boeing’s 737 jets, a trend we have been witnessing in the past couple of quarters, were observed in the second quarter of 2022 as well. Notably, the aerospace giant delivered 103 737 jets in the soon-to-be-reported quarter, reflecting quite a solid improvement of 106% from 50 units delivered in the year-ago quarter.
In fact, such significant delivery figures of 737 primarily drove a significant surge of 53.2% in the company’s overall commercial deliveries. This, in turn, must have contributed to Boeing Commercial Airplane (BCA) business segment revenues in the soon-to-be-reported quarter.
The Boeing Company Price and EPS Surprise
The Boeing Company price-eps-surprise | The Boeing Company Quote
However, the aerospace giant was unable to deliver any of its 787 Dreamliner jets in the second quarter of 2022, owing to production quality issues related to the program. This might have partially impacted the top-line performance of the BCA segment.
Currently, the Zacks Consensus Estimate for Boeing’s commercial business segment’s revenues, pegged at $6,491 million, indicates a solid 7.9% improvement from the year-ago quarter’s reported figure.
Earnings Expectation
On the cost front, delivery delays concerning the 787 performance issue are likely to have had an impact on BCA’s operating profit, thereby hurting its quarterly earnings. Also, the production pause for the 777-9 program is projected to result in approximately $1.5 billion of abnormal costs beginning in the second quarter, which in turn must have weighed on this unit’s bottom line.
However, improvements in commercial airplanes' financial performance due to increasing 737 MAX deliveries and consistent efforts by the BCA team to manage costs through business transformation activities must have contributed to this unit’s bottom-line growth in the first quarter.
Further, we expect to witness a steady improvement in the company’s expenses in relation to the storage of the 737 aircraft as jets stored so long in the inventory are gradually getting delivered.
So, the effect of the aforementioned factors on the overall second-quarter earnings performance of the BCA segment seems to have been mixed.
Currently, the Zacks Consensus Estimate for Boeing’s commercial business segment’s bottom line, pegged at a loss of $158 million, indicates an improvement from the year-ago quarter’s reported figure of a loss of $472 million.
What the Zacks Model Unveils
Our proven model does not conclusively predict an earnings beat for Boeing this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. This is not the case here.
Boeing has an Earnings ESP of -62.40% and a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Stocks to Consider
Here are three defense companies you may want to consider as these have the right combination of elements to post an earnings beat this season:
L3Harris Technologies (LHX - Free Report) : It is scheduled to release its second-quarter results on Jul 28. LHX holds a Zacks Rank #3 and has an Earnings ESP of +1.01%. You can see the complete list of today’s Zacks #1 Rank stocks here.
LHX delivered a four-quarter average earnings surprise of 2.32%. The Zacks Consensus Estimate for L3Harris’ second-quarter earnings, pegged at $3.16, has moved up 0.3% over the past seven days.
Spire Global, Inc. (SPIR - Free Report) has an Earnings ESP of +9.43% and a Zacks Rank #3.
Spire delivered an earnings surprise of 7.7% in the last reported quarter. The Zacks Consensus Estimate for Spire’s second-quarter sales is pegged at $18.93 billion.
CAE Inc (CAE - Free Report) : The company is expected to release its fiscal first-quarter results soon. It holds a Zacks Rank #3 and has an Earnings ESP of +2.27%.
The Zacks Consensus Estimate for CAE’s fiscal first-quarter earnings, pegged at 18 cents, has remained unchanged over the past seven days. CAE delivered a four-quarter average earnings surprise of 7.67%.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.